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“capital expenditure”

Business ExpensesSection 37Section 373,515 judgments

The decision most relied on for capital expenditure is Empire Jute Co. Ltd. v. CIT (124 ITR 1), cited in 622 judgments on BharatTax.

Leading authorities on capital expenditure

Empire Jute Co. Ltd. v. CIT
124 ITR 1 · 1980 · Supreme Court
622
citing judgments

Expenditure is classified as revenue or capital based on its practical business effect, necessity, or expediency, rather than solely on the juristic classification of rights; an enduring benefit does not automatically make an expenditure capital if it facilitates trading operations or business efficiency.

Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT
227 ITR 172 · 1997 · Supreme Court
621
citing judgments

Interest income earned on deposits, particularly before the commencement of business operations or as a requirement for business licensing, is taxable as "income from other sources" under Section 56, and cannot be treated as business income or set off against interest on borrowed funds.

Madras Industrial Investment Corporation Ltd. v. CIT
225 ITR 802 · 1997 · Supreme Court
568
citing judgments

Expenditure that provides an enduring benefit should be amortized over its useful life, not allowed as a deduction in a single year, to prevent a distorted picture of profits. Specifically, premium paid on debentures for their issue should be amortized on a straight-line method over the life of the debentures.

South Indian Bank Ltd. v. CIT
438 ITR 1 · 2021 · Supreme Court
508
citing judgments

The mixed fund theory is affirmed, holding that no disallowance of interest expenditure under Section 14A can be made if the assessee possesses sufficient non-interest bearing funds, such as capital and reserves, to cover investments made in tax-free securities.

CIT v. Institute of Banking Personnel Selection
264 ITR 110 · 2003 · High Court
398
citing judgments

Depreciation is allowable on assets for which the cost has been fully allowed as an application of income under Section 11 in previous years, when computing the income of a charitable trust. Charitable trusts are also entitled to carry forward their deficit.

Taparia Tools Ltd. v. JCIT
372 ITR 605 · 2015 · Supreme Court
343
citing judgments

An expenditure does not automatically become capital in nature merely because it results in some enduring benefit for the assessee; it can be treated as revenue expenditure if incurred for genuine business purposes.

Biocon Ltd. v. DCIT
35 Taxmann.com 335 · 2013 · ITAT
322
citing judgments

The discount arising from the grant of Employee Stock Option Plans (ESOPs) is an allowable business expenditure under Section 37(1) of the Income-tax Act, 1961, as it is an ascertained liability, not a contingent one, and constitutes a revenue expense rather than a capital expense.

Alembic Chemical Works Co. Ltd. v. CIT
177 ITR 377 · 1989 · Supreme Court
275
citing judgments

Expenditure that provides a commercial advantage of an enduring nature may still be classified as revenue expenditure if its purpose is to facilitate existing trading operations, improve business efficiency, or upgrade existing products, depending on the specific context and objective.

Judgments citing capital expenditure

Deputy Commissioner of Income Tax Officer Circle-3(1)(1), Bangalore vs. M/S Fmc India Private Limited, Bangalore

In the result, appeal filed by assessee stands partly allowed and appeal filed by revenue stands allowed for statistical purposes

ITA 2732/BANG/2018[2013-14]Status: DisposedITAT Bangalore29 Sept 2022AY 2013-14

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiassessment Year : 2013-14 M/S. Fmc India Pvt. The Assistant Ltd., Commissioner Of Embassy Star 1St Floor, Income Tax, No. 8 Palace Road, Circle 3(1)(1), Bangalore – 560 052. Bangalore. Vs. Pan: Aaacf4579N Appellant Respondent & Assessment Year : 2013-14 (By Revenue) Assessee By : Shri Nageswar Rao, Advocate Revenue By : Smt. S. Praveena, Cit Drp-2 Date Of Hearing : 07-07-2022 Date Of Pronouncement : 29-09-2022 Order Per Beena Pillaipresent Cross Appeals Are Filed By The Assessee & Revenue Against Order Dated 23/07/2018 Passes By The Ld.Cit(A)-3, Bangalore For Assessment Year 2013-14 On Following Grounds Of Appeal:

For Appellant: Shri Nageswar Rao, AdvocateFor Respondent: Smt. S. Praveena, CIT DRP-2
Section 250Section 37(1)

facts, in treating the sum of INR 2,04,289 being expenditure incurred towards RTO charges and vehicle transfer charges as capital expenditure and thereby erred in not allowing the same under section 37(1) of the Act. 2.2. The learned AO/ CIT(A) failed to appreciate that expenditure incurred ... debited to the Statement of Profit and Loss as product development expenditure on the grounds that it is a capital expenditure. 4.2. The learned CIT(A) failed to appreciate that the product development expenditure primarily pertains to testing fees and incidental charges and therefore should be allowed as a deduction

M/S Fmc India Private Limited, Bangalore vs. Assistant Commissioner of Income Tax Circle-3(1)(1), Bangalore

In the result, appeal filed by assessee stands partly allowed and appeal filed by revenue stands allowed for statistical purposes

ITA 2611/BANG/2018[2013-14]Status: DisposedITAT Bangalore29 Sept 2022AY 2013-14

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiassessment Year : 2013-14 M/S. Fmc India Pvt. The Assistant Ltd., Commissioner Of Embassy Star 1St Floor, Income Tax, No. 8 Palace Road, Circle 3(1)(1), Bangalore – 560 052. Bangalore. Vs. Pan: Aaacf4579N Appellant Respondent & Assessment Year : 2013-14 (By Revenue) Assessee By : Shri Nageswar Rao, Advocate Revenue By : Smt. S. Praveena, Cit Drp-2 Date Of Hearing : 07-07-2022 Date Of Pronouncement : 29-09-2022 Order Per Beena Pillaipresent Cross Appeals Are Filed By The Assessee & Revenue Against Order Dated 23/07/2018 Passes By The Ld.Cit(A)-3, Bangalore For Assessment Year 2013-14 On Following Grounds Of Appeal:

For Appellant: Shri Nageswar Rao, AdvocateFor Respondent: Smt. S. Praveena, CIT DRP-2
Section 250Section 37(1)

facts, in treating the sum of INR 2,04,289 being expenditure incurred towards RTO charges and vehicle transfer charges as capital expenditure and thereby erred in not allowing the same under section 37(1) of the Act. 2.2. The learned AO/ CIT(A) failed to appreciate that expenditure incurred ... debited to the Statement of Profit and Loss as product development expenditure on the grounds that it is a capital expenditure. 4.2. The learned CIT(A) failed to appreciate that the product development expenditure primarily pertains to testing fees and incidental charges and therefore should be allowed as a deduction

M/S. Standard Chartered Bank, Mumbai vs. The ACIT (It)1(3), Mumbai

In the result, appeal filed by the assessee is allowed and appeal filed by the Revenue is dismissed

ITA 803/MUM/2009[1999-2000]Status: DisposedITAT Mumbai27 Sept 2022AY 1999-2000

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blestandard Chartered Bank V. Acit – Range-1(3) Taxation Department, 23-25 Scindia House, Ballard Estate M.G. Road, 3Rd Floor N.M. Marg, Mumbai - 400038 Fort, Mumbai - 400001 Pan: Aabcs4681D (Appellant) (Respondent) Adit (It)– 2(3) V. Standard Chartered Bank Room No. 120, 1St Floor Taxation Department, 23-25 Scindia House, Ballard Estate M.G. Road, 3Rd Floor N.M. Marg, Mumbai - 400038 Fort, Mumbai - 400001 Pan: Aabcs4681D (Appellant) (Respondent) Shri P.J. Pardiwala & Assessee Represented By : Shri Fenil Bhatt Shri Soumendu Kumar Dash Department Represented By :

Section 115JSection 14ASection 90Section 90(2)

expenditure incurred on refurbishment of leasehold premises as capital in nature. Accordingly, expenditure of Rs. 1,77,56,417/- was disallowed as capital expenditure on which depreciation at the eligible rate was allowed. b) The learned CIT(A) further erred in confirming the disallowance of expenditure incurred on Software Development ... these amounts as revenue expenditure and allowed a deduction in that regard to the assessee. The claim of the department that the expenditure was capital expenditure and was, therefore, not deductible was negatived by the Tribunal. On the application of the department the Tribunal referred the following question

Dy CIT 10 (3)(1), Mumbai vs. M/S Navin Flourine International Ltd., Mumbai

In the result, the appeal filed by the revenue is dismissed

ITA 6814/MUM/2019[2009-10]Status: DisposedITAT Mumbai22 Sept 2022AY 2009-10

Bench: Shri Pramod Kumar, Vp & Shri Aby T. Varkey, Jm आयकर अपील सं/ I.T.A. No. 6814/Mum/2019 (निर्धारण वर्ा / Assessment Year: 2009-10) Dcit-10(3)(1) बिधम/ M/S. Navin Flourine Room No. 217/212, 1St International Ltd. Vs. 2Nd Floor, Suntech Centre, Near Floor, Aayakar Bhawan, Churchgate, Mumbai- Garware Plastics, 37/40, 400020. Subhash Road, Vile Parle (E)], Mumbai-400057. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aabcp0464B (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Revenue By: Shri Chetan M. Kacha (Sr. Ar) Assessee By: Ms. Aastha Shah/Aamod Prabhudesai सुनवाई की तारीख / Date Of Hearing: 25/08/2022 घोषणा की तारीख /Date Of Pronouncement: 22/09/2022 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By Revenue Against The Order Of The Ld. Commissioner Of Income Tax (Appeals)- 17, Mumbai Dated 20.08.2019 For Ay. 2009-10. 2. At The Outset, The Ld. Ar Of The Assessee Brought To Our Notice That The Ld. Cit(A) Has Given Relief To The Assessee Against The Action Of The Ao Who Passed The Re-Assessment Order Dated 26.03.2015 U/S 143(3) R.W.S. 263 Of The Income Tax Act, 1961 (Hereinafter “The Act”). According To The Ld. Ar, The Ao Passed The Re-Assessment Order Dated 26.03.2015 Pursuant To The Order Of The Ld. Cit-07, Mumbai Passed U/S 263 Of The Act Dated 24.01.2014 Wherein The Ld. Cit Found Fault With The Action Of The Ao In Respect Of Original Assessment Framed U/S 143(3) Of The Act Dated 29.12.2011 Wherein The Ao A.Y. 2009-10 M/S. Navin Flourine International Ltd. Assessed The Total Income Of Assessee At Rs.71,09,93,779/-. The Ld Cit U/S 263 Of The Act Found Fault With The Original Assessment On The Following Four (4) Issues: -

For Appellant: Ms. Aastha Shah/Aamod PrabhudesaiFor Respondent: Shri Chetan M. Kacha (Sr. AR)
Section 143(3)Section 145ASection 154Section 263

said asset is transferred to the fixed asset account. During the current assessment year, the assessee claimed and have been allowed deduction of the capital expenditure amounting to ₹ 2,58,19,434/- which is pending for completion and was transferred to the fixed asset account. This has been done without